Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (6)

RATIONALE OF THE STUDY

NEXANS Vietnam Power Cable Company (NVPC) is a joint venture between NEXANS Group and the Electricity of Vietnam (EVN), specializing in the manufacturing of electric cables for the power sector and export Initially, NVPC primarily focused on supplying power cable products to EVN, as its production capacity was insufficient to meet the demand Consequently, the company did not prioritize the development of comprehensive business strategies during its early establishment.

As the demand for power cables from EVN has nearly reached saturation, the procurement methods have shifted to competitive bidding, leading to a continuous increase in the number of electric cable manufacturers.

The electric cable manufacturing industry is witnessing intense competition with around 40 key players, leaving NVPC at a disadvantage due to its lack of strategic preparation Without a well-defined business and competitive strategy, NVPC has struggled to maintain its market position, allowing both internal and external competitors to encroach upon its share, resulting in challenging conditions for the company.

To enhance its position in the Vietnamese electric cable market and ensure sustainable growth, the company must establish a competitive strategy for the present and outline a clear development direction for the near future.

SIGNIFICANCE OF THE STUDY

a) The goals of this research is to build a business strategy for a typical small

Medium enterprises, particularly joint-venture firms, play a crucial role in Vietnam's economic integration with global and regional markets Analyzing the business and production environment of the electric cable manufacturing industry reveals essential elements that inform the production and business strategies of small and medium enterprises in Vietnam By assessing internal factors such as strengths and weaknesses, companies can formulate effective business strategies to thrive in a competitive landscape This approach can serve as a model for other small and medium enterprises across various sectors in the Vietnamese economy.

OBJECTIVES

This research delves into the theoretical foundations of business strategy within the context of Vietnam's electric cable production market It thoroughly analyzes the business environment and evaluates the current production and operational status of NVPC The findings aim to develop a business strategy that aligns with the sustainable development goals of the company.

STUDY METHODOLOGY

This research employs various methodologies, including analysis, argumentation, general comparison, and forecasting, utilizing actual data from the Company and industry market information to identify tailored solutions for the Company in its specific context.

Subject: Nexans Vietnam Power Cable Joint-Venture Company, hereafter called NVPC or the Company.

This study examines the current state of the Company by analyzing its internal factors and the competitive landscape, including the business environment and market development alongside rival cable manufacturers Based on this analysis, the research proposes investment and development strategies, including competitive tactics, aimed at ensuring the Company’s sustainable growth and success in the market.

REPORT STRUCTURE

Title of the research: "BUILDING BUSINESS-LEVEL STRATEGY OF NEXANS VIET NAM POWER CABLE COMPANY PERIOD 2010 - 2015"; except the introduction, conclusion and references, this report includes the following chapters:

Chapter II: ANALYSING CURRENT STATUS OF DOING BUSINESS

OF NEXANS VIET NAM POWER CABLE COMPANY

Chapter III: BUILDING AND MANAGING IMPLEMENTATION OF COMPANY’S BUSINESS STRATEGY.

THEORETICAL BASIS

OVERVIEW OF BUSINESS STRATEGY

The concept of strategy, originating from ancient military practices, refers to the skillful management of resources to achieve victory over adversaries In the realm of business, despite the absence of direct confrontations, competition remains intense, with success ultimately measured by each competitor's market performance Customers play a crucial role in recognizing and evaluating the achievements of these competitors.

Strategy has various definitions that reflect the perspectives of different authors Chandler (1962) defines strategy as the identification of long-term business goals and the allocation of resources to achieve them Quinn (1980) views strategy as a cohesive plan that integrates major objectives, policies, and actions Johnson and Scholes (1999) describe strategy as the long-term direction and scope of an organization aimed at gaining a competitive advantage by effectively utilizing resources in changing environments to meet market demands and stakeholder expectations Collectively, these definitions highlight the multifaceted nature of strategy, which Mintzberg further elaborates through his five P's framework.

Plan: a series of actions which intended consistently

Pattern: is consistency of behavior chronologically, may be intended or not intended.

Position: the suitability between the organization and its environment.

Perspective: the manner of deep realization about the world.

Ploy: the specific manner to trick the opponent.

The definition of strategy varies based on its level, and this interpretation typically reflects individual perspectives Generally, there are three recognized levels of strategy, each with its own distinct definition.

- Strategy at company level is a strategy which aims toward the goal and overall scope of the organization.

- Strategy at business unit level is a strategy relating how to compete successfully in the specific market.

- Functional strategy is a strategy which help business strategy and company strategy to be effectively implemented by the proper resources, processes, people and needed skills.

A successful business strategy involves effectively mobilizing resources to create competitive advantages and achieve specific goals According to the Strategic Management textbook from the University of Griggs, strategy is defined as a series of complex actions aimed at utilizing an organization’s resources to reach defined objectives Understanding and implementing these strategic actions is essential for any organization striving to meet its targets in a competitive landscape.

In today's globalized economy, companies must expand their operations beyond national borders, making a global strategy essential for addressing international business challenges The competitive landscape reveals that while many companies thrive, others struggle, with success or failure often hinging on their ability to differentiate themselves This differentiation stems from unique competencies, including skills, technology, and resources, which enable companies to establish competitive advantages that are difficult for rivals to replicate Effective business strategy encompasses the overall commitments and actions necessary for leveraging core capabilities within specific markets As Alain Threlart suggests, navigating the complexities of global competition requires a strategic approach that blends artistry with meticulous planning.

Strategy is the essential craft of an organization to effectively compete and achieve success As M Porter articulates, it involves creating significant competitive advantages that serve as a defense against rivals.

Business strategy is often viewed as an art form essential for competing in the market and fostering enterprise growth It encompasses the design and utilization of unique advantages for each business According to various management experts, business strategy can be defined as a structured plan aimed at achieving specific goals G Alleret describes it as determining the means to reach these goals, while D Bizrell and colleagues see it as a comprehensive plan guiding an enterprise toward its objectives Gluect emphasizes that strategy involves a cohesive and integrated approach to ensure business targets are met Ultimately, business strategy is the art of coordinating and controlling activities to achieve long-term goals while adapting to the competitive business environment.

An enterprise functions like a living organism, necessitating adherence to natural laws such as birth, adaptation, and survival To achieve substantial development, it is crucial for each enterprise to regularly evaluate its strengths, weaknesses, opportunities, and threats.

Business strategy, akin to military strategy, aims to align an enterprise's capabilities with the competitive environment it operates in Unlike military outcomes, business competition often presents opportunities for firms to enhance their strengths rather than simply determining winners and losers Over time, the value of competitive advantages can diminish, necessitating a flexible approach to strategy that includes multiple decisions and the continuous identification of new opportunities Additionally, businesses must proactively address potential threats and weaknesses while adapting to shifting market dynamics Strategic decision-making is essential for all businesses, with certain decisions becoming increasingly urgent and significant during specific periods.

A business's strategy reflects its beliefs about location and competitive advantages over rivals It encompasses the actions chosen to differentiate from competitors According to Derek F Abell, three key factors determine a company's competitive approach: the customer's demand (What), the target customer groups (Who), and the methods used to meet those demands (How) (DF Abell, 1980).

1.1.2 Main features of business strategy

To achieve long-term success, businesses must continually enhance their competitive advantages Key considerations when selecting a business strategy include determining the products and services to offer and the methods for their production and delivery Therefore, a robust business strategy encompasses these essential characteristics.

- Business strategy clearly defines the basic targets and business directions of enterprises in each period.

- Orientation of business strategy to ensure business continuously and firmly develop in continuous fluctuating business environment

A robust business strategy is essential for maximizing resource mobilization and optimizing the use of enterprise assets both now and in the future By leveraging strengths and capitalizing on opportunities, businesses can enhance their competitive edge and achieve sustained advantages in the marketplace.

- Business strategy of the business are reflected throughout the continuous process.

- Business strategy always thought advancing, winning in market.

A successful business strategy typically spans a long-term period of 3 to 10 years When developing their business strategy, organizations should consider essential characteristics that are crucial for effective planning and execution.

1.1.3 Objective and role of business strategy

A successful business strategy involves identifying opportunities and challenges within the environment, assessing strengths, weaknesses, and capabilities, and recognizing core competencies This analysis informs decisions regarding product selection, market positioning, differentiation, and essential investment strategies.

A well-defined business strategy is crucial for enterprises to compete effectively and ensure long-term profitability It helps organizations set clear goals and directions, serving as a foundation for all production and operational activities By leveraging opportunities and proactively addressing market threats, a robust business strategy enhances resource efficiency and strengthens competitive positioning Furthermore, it establishes a solid framework for making informed decisions and policies that adapt to market fluctuations, ultimately fostering sustainable growth.

SELECTING AND PLANNING BUSINESS STRATEGY

1.2.1 Roadmap for creating compatitive advantages

To achieve success, competitive strategies should leverage resources that provide a competitive advantage Companies can establish their unique advantages by taking strategic steps that enhance their ability to attract customers more effectively than their competitors While the approaches may vary, the key is that customers perceive superior value in the company's offerings compared to alternatives in the market.

There are three primary competitive strategies that companies can adopt to gain an advantage: cost leadership, differentiation, and focus Each strategy reflects a company's deliberate choice regarding its product offerings, target market, and unique capabilities These strategic options are interrelated and significantly influence one another, shaping the overall competitive landscape.

The cost leadership strategy involves a series of actions aimed at delivering products or services that meet customer expectations while maintaining the lowest costs compared to competitors This approach relies on a business's ability to offer lower-priced options without compromising quality The primary goal of implementing a cost leadership strategy is to outperform competitors by minimizing manufacturing and supply costs, ultimately achieving a competitive advantage in the marketplace.

The primary goal of a differentiation strategy is to secure a competitive advantage by developing unique products or services that meet specific customer needs Companies that successfully differentiate themselves aim to fulfill customer demands in ways that competitors cannot, allowing them to command higher prices—often above the industry average Customers are willing to pay a premium for these differentiated offerings due to their trust in the quality and distinctive value of the products.

A centralization strategy involves targeted actions aimed at producing goods and services to meet the specific demands of a competitive market segment Unlike broader strategies, it directly addresses the needs of a defined group of customers This approach concentrates on specific market niches, which can be identified based on geographic location, customer demographics, or product distribution channels.

Strategy of vertical integration means that company is producing the inputs for themselves (integration on the back or in reverse) or dispersing their outputs (forward integration).

A company which pursues vertical integration often comes from the desire to strengthen the competitive position of original or core business Reasons for company to pursue strategy of integration are:

- Allow company to create barriers to new competitors.

- Promote investment in assets, specialize in improving efficiency.

A diversification strategy aims to enhance a company's value by enabling its business units to implement approaches that boost revenue and minimize costs This strategy is also driven by the need to strengthen market power in relation to competitors, ultimately leading to greater success and increased overall value for the company.

There are two main types of diversification:

Related diversification involves expanding into new businesses that are connected to existing operations through shared elements in the value chain This strategy typically focuses on similarities in manufacturing, marketing, or technology, allowing companies to leverage their current capabilities while exploring new opportunities.

- Unrelated diversification is diversify into new business areas, but not clearly related to any other existing business.

A strategic alliance is an agreement between multiple companies to collaboratively share risks, costs, and benefits while pursuing new business opportunities These alliances often take the form of official joint ventures, where each party contributes capital, or through long-term contracts that establish mutually beneficial activities.

A strategic alliance is an effective strategy for companies aiming to generate value through the transfer of skills and resource sharing among diverse business units This collaborative framework enables organizations to pool essential resources for launching new business units By forming strategic alliances, companies can leverage complementary capabilities to innovate and develop a range of new products.

Internal investment is a strategic approach for companies to leverage their existing resources and capabilities to enter new markets This strategy is particularly prevalent among high-tech firms that utilize their technological assets to identify and exploit market opportunities, facilitating growth through targeted internal investments.

When entering emerging industries or early-stage markets where competitors lack the full capacity to compete, a company may adopt an internal investment strategy despite its own limitations In these scenarios, acquiring an established business with the required capabilities is not an option, leaving self-investment as the only viable path for market penetration.

Acquisition is a strategic approach where a company gains control or benefits from another company, aiming to transform the acquired entity into a dependent business unit Unlike mergers, which often stem from amicable relationships, acquisitions typically involve a more aggressive and unfriendly method of taking control.

Appropriation of control refers to a unique form of acquisition where the targeted business fails to generate competitive interest in an auction Often, these proposals are not pursued by the company's management but are instead initiated by adversaries In certain instances, these acquisition proposals may originate from entities connected to the targeted company.

When a company seeks to enter new business areas, it may prefer internal investment over buybacks, yet it often hesitates due to the associated risks and costs This is especially true when attempting to establish a new business unit in a growing sector, where the financial burden can exceed the company's capacity In such cases, forming a joint venture with another company can be an effective strategy, allowing both parties to share the significant risks and costs involved in the project.

The emerging nature of the industry presents significant risks for the project, as competitive technologies are likely to emerge A joint-venture project becomes valuable when companies can leverage each other's strengths to enhance their capacity for establishing a successful business By collaborating with another company that possesses complementary skills and assets, a firm can significantly increase its chances of success in launching a new venture.

DETERMINATION OF MECHANISM FOR IMPLEMENTING

Implementing a strategy involves creating organizational arrangements that enable a company to pursue its goals effectively Organizational design entails selecting the right combination of structure and control systems to maximize value and achieve a competitive advantage The organizational structure and control systems serve two primary functions.

- Coordinate the activities of employees so that they work effectively to implement strategy; to increase competitive advantage.

- Encourage staffs, give them incentive to achieve superior performance, quality, improvement and satisfy customer’s demand.

A well-aligned organizational structure is crucial for the effective implementation of strategies, as it defines the necessary tasks and their execution By facilitating the execution of strategies, the organizational structure plays a decisive role in the overall implementation process, ensuring that tasks are carried out efficiently within the organization.

An effective organizational structure is essential for creating stability within a company, enabling consistent control over daily operations while allowing for proactive management Additionally, it offers the flexibility needed to cultivate competitive advantages for future strategies, ensuring that resources are optimally allocated to enhance the company’s competitiveness and drive future success.

An effective organizational structure enables administrators to coordinate activities across various functions, maximizing the skills and capacities of each department To fully leverage the synergy between different parts of the organization, it is essential to establish mechanisms that facilitate communication and knowledge sharing among departments.

Organizational structure consists of essential elements such as allocation and combination Allocation refers to how a company assigns staff and resources to various tasks, ultimately creating value As the number of functions or departments within an organization increases, the complexity of allocation also rises.

The matrix structure organizes work through two types of assignments: vertical assignments grouped by functions like design, manufacturing, sales, and marketing, and horizontal assignments based on specific products or projects This dual assignment system creates a complex network of relationships that intertwines project and functional elements, enhancing collaboration and efficiency within the organization.

(Source: Pro./Ph.D Le The Gioi, Dr Nguyen Thanh Liem, MBA Nguyen Huu Hai

(2009), Strategic Management, Statistics Publishing House)

In product group structures, tasks are organized into product or project channels to minimize management costs and enhance oversight of the manufacturing process Unlike the temporary arrangements seen in matrix structures, this approach consistently groups functional specialists, leading to reduced coordination costs Consequently, the stability in duties and reporting relationships allows for more efficient management compared to the dynamic changes typical of matrix structures.

In geography structure, geographic regions become important basis of grouping activities of organization This allows to meet the demand of customers by region and reduce transportation costs (see Figure 1.6)

CHECKING AND EVALUATING RESULT OF IMPLEMENTING

Strategy control is the process through which administrators monitor and evaluate the performance of an organization and its members during the implementation of business strategies By assessing the effectiveness of activities, they can identify areas for improvement and make informed adjustments to the business strategy.

Monitoring and inspecting the outcomes of a business strategy is essential for assessing organizational performance and resource utilization This process not only helps in tracking whether current goals are being met but also fosters employee engagement by keeping them focused on key organizational priorities Furthermore, it encourages teamwork among staff to collaboratively develop solutions that enhance the effectiveness of the business strategy.

A strategy control system is essential for setting goals and providing feedback, enabling strategic managers to assess the successful implementation of business strategies An effective control system must be flexible enough to adapt to unforeseen events while delivering accurate information that reflects the organization's performance Additionally, it should supply timely data to assist administrators in making informed decisions Designing a strategic control system involves four key steps.

- Create measurement and monitoring systems;

- Compare performance with established targets;

- Evaluate results and remedy actions to repair if necessary.

Strategic inspection process is done by following steps:

- Define checking and evaluation content, based on the content of established business strategy.

- Propose checking and evaluation standards, based on the targets of the business strategy.

- Quantify results done through the establishment of monitoring and measurement systems

Evaluating the results of an implementation strategy is crucial for administrators If the outcomes exceed the established targets, it indicates that the initial goals may have been set too low and should be revised upward for the next period Conversely, if performance falls short of the intended targets, administrators must consider whether to adjust their strategy accordingly.

- Identify the causes of distortions, can be caused by external environmental factors or internal environmental factors or both of them.

To effectively achieve strategic business goals, organizations must implement a control system that integrates behavioral control and organizational culture Strategic control involves setting targets, monitoring progress, evaluating performance, and rewarding achievements A successful control system should be flexible, accurate, and capable of delivering timely feedback to support strategic planning.

ORGANIZATION CULTURE

The primary function of control within an organization is to guide members' behavior towards achieving organizational goals and to implement corrective actions when performance falls short Additionally, it helps maintain focus on long-term organizational success by identifying opportunities to leverage resources and capabilities for value creation An organization's culture plays a crucial role in the strategic control system, effectively supporting both of these essential functions.

Organizational culture is a set of specific values and norms shared by people and groups within an organization; and control how them interacting with each other and outside organizations.

Organizational values represent the core beliefs and ideals that guide members towards achieving common goals, shaping the expected behaviors and standards within the organization These values evolve into specific organizational standards, which serve as guidelines for appropriate employee conduct in various situations, ultimately regulating interactions among members and fostering a cohesive work environment.

Cultural organizations serve as a governing framework where strategic leaders influence behavior through established values and standards These values and standards delineate acceptable conduct, guiding and regulating member interactions within the organization.

Organizational socialization refers to the process by which individuals learn and internalize the cultural values of an organization, ultimately becoming its members This cultural assimilation is significant because it leads to a deep-rooted adherence to organizational values, often without conscious thought The transmission of these values and norms typically occurs through storytelling, imagery, language, and various other tools used within the organization.

This chapter outlines fundamental strategic theories and introduces methods for developing and selecting effective company strategies, along with measures for implementing strategic management By applying these theoretical frameworks, we can thoroughly analyze key aspects of the company in the following section, enabling the selection of the most appropriate and scientifically grounded strategy for optimal performance.

Theoretical systems will serve as a scientific foundation for analyzing the business environment, evaluating the company's position within the socio-economic landscape, and understanding the various factors that influence the company's strategy and policies moving forward.

ANALYSING CURRENT STATUS OF DOING BUSINESS OF

COMPANY BACKGROUND

NEXANS VIETNAM Power Cable Company, located at 116 Ha Huy Tap in Yen Vien Town, Gia Lam, Hanoi, is a joint venture with Hanoi Power Company, which is part of the Electricity of Vietnam.

- and the NEXANS Korean Company under NEXANS Group, France.

2.1.1 Foundation and development of the Company

In 1995, the construction of Vietnam's first 500 kV North-South power transmission line led to a significant surge in demand for construction materials and equipment This increase necessitated the importation of nearly all cables and related accessories.

To support Vietnam's growing economy and enhance the power grid, the country's power sector focused on establishing factories for electrical equipment manufacturing The Yen Vien Mechanical Factory, part of Dong Anh Electrical Equipment Company, aimed to produce cables and structural steel for power grid transmission lines However, the factory's technical capabilities were inadequate to meet development demands In 1997, a joint venture was established with DAESUNG Korea to invest in aluminum cable production, leading to significant advancements in the company's operations.

20/01/1997: Granted investment license in 1927 by the Ministry of Planning and

Investment for period of 40 years joint-venture, 30 million USD legal capital.

02/11/1998: Granted license of adjusting investment scale and period is 30 years, total investment capital is 15 million.

25/08/1999: Started installation of the machines from South Korea.

20/11/1999: Started production and sale of bare aluminum cable products, participated in providing power cable for North-South 500kV transmission lines circuit #2.

05/05/2001: Received the ISO 9002:1994 quality certificate from AFAQ-

13/05/2002: The South Korea joint-venture partner was renamed from

DAESUNG to NEXANS KOREA after Daesung company merged into NEXANS Group and renamed NEXANS KOREA Ltd.

03/11/2003: Received ISO 9001:2000 Certificate of AFAQ-ASCERT

23/04/2004: Put into production of aluminum alloy cables; become the only one manufacturer producing aluminum alloy cables in Vietnam that time.

01/01/2005: Assembled 9.5 tightly rolling aluminum machine (for exporting aluminum billet to South Korea; exported first shipment to the U.S.,

04/05/2005: Changed Vietnam partner to Hanoi Power Company from Yen Vien

Mechanical Factory (because Electricity of Vietnam transferred management responsibilities).

2.1.2 Ownership, key business, product and market

Chartered capital of the Company today is some 8,839,685.12 USD equivalent of 114,417,089,743 VND of which EVN shares some 3,619,790.12 USD respectively 40.95% and the contributing partners DEASUNG of 5,219,895 USD, respectively 59.05%

The company's initial strategy centered on the domestic market, specifically supplying power cables for the 500kV line circuit #2 and advancing the development of additional power transmission lines in Vietnam.

Up to year 2001, NEXAN France Company bought back DAESUNG Korea company and renamed Korean partner to NEXANS KOREA Company The

NEXANS KOREA continuously invested all working capital into the company (2 million USD), the company began operating completely

+ In 2002 closing trading company in the U.S belonging to DAESUNG due to ineffective operation.

+ In 2003 bought a Korean company of Kuk Dong Co - specializing in producing cable ships, yachts.

- Sold cable manufacturing company in Tanzania Africa due to poor efficiency Recently in Africa, Nexans has some trading companies.

- Sold an electric cable joint venture in Nanning - China (founded by DAESUNG) for Chinese partners as Nexans has a factory in Shanghai.

- Establishment of a research center to develop new products.

After NEXANS took control in the joint venture from former Deasung, since

In 2005, the company was rebranded as NEXANS Vietnam Power Cable Company (NVPC), with a strategic focus on aluminum cables and power cables aimed at serving the power transmission and distribution market in Vietnam.

In 2006, Nexans merged with the Australian company Olex, which holds a significant share of the electrical cable market in Australia However, Olex faces challenges due to high production costs and insufficient capacity to meet market demand To address this, Nexans is focusing on transferring technology from Olex to NVPC, aiming to enhance NVPC's export capabilities to the Australian market.

The Nexans Korea continues to invest all the working capital into the Company, since 2006 the Company started its full capacity of production.

In 2005, the Ministry of Industry issued Decision No 111/2004/QD-BCN, leading to the equitization of Yen Vien Mechanical Factory, a subsidiary of the Electrical Equipment Manufacturing Company This transition involved transferring Vietnam's contributed capital in the joint venture from Yen Vien Mechanical Factory to the Hanoi Power Company, which is part of the Electricity of Vietnam (EVN).

After successfully implementing a joint-venture strategy, partners must assess each other's objectives and collaboratively create a tailored development strategy for the joint venture As a distinct legal entity, the joint venture must align its strategy with Vietnam's socio-economic landscape and navigate the intensifying competition in the regional power cable market to ensure mutual benefits for both partners.

ANALYSIS OF BUSINESS OPERATION OUTCOMES IN THE LAST

With extensive management experience drawn from Korean and European markets, the company has successfully adapted to evolving market mechanisms, leading to continuous growth Initially facing production and business losses, the company has progressively turned a profit and now holds a significant share in Vietnam's power cable market while also exporting to international markets.

2.2.1 Evaluation of financial status of the Company

According to the Company’s annual reports for years 2006, 2007 and 2008, some of key financial factors are summarized in table 2.1 below:

Table 2.1: Some key financial indicators of the Company in years 2006, 2007 and 2008

(Source: Summary from Company’s annual reports for years 2006, 2007 and 2008)

Figure 2.1: Company’s asset structure period 2006 - 2008

In figure 2.1 it can be seen that the Company's assets fluctuate over the years.

In addition, the structure of assets of the Company also changed between years In

In 2008, the Company experienced a significant increase in current assets while non-current assets decreased, contributing to overall asset growth The decline in current assets in 2007 was mainly attributed to changes in cash and cash equivalents By the end of 2008, current assets surged due to higher cash and receivables, despite a reduction in non-current assets, which was driven by decreased fixed assets and ongoing construction costs.

The Company's financial situation is strong, with a debt ratio of only 38.20% by the end of 2008, indicating a solid capital structure (see Figure 2.2) Equity capital has consistently increased each year, allowing the Company to rely primarily on equity funds and customer prepayments for project investments Additionally, the low interest rates present an opportunity for the Company to leverage financial borrowing at a reduced cost, minimizing the impact of interest rate fluctuations.

Figure 2.2: Company’s capital source structure period 2006 - 2008

From above financial indicators can extract the following financial factors:

Table 2.2: Financial factors of the Company over years 2006, 2007, 2008

4 Fixed asset utilization efficiency (AU) times 1.59 3.02 1.76

In 2007, the company's liquidity coefficient saw a significant increase, but it declined in 2008 as a result of the global economic downturn affecting Vietnam Despite this, the company's profits have consistently risen over the years, indicating improved management of input costs and operational efficiency.

The Company maintains a low financial leverage ratio, which alleviates pressure from debt repayment and financial costs, particularly amid rapidly rising interest rates Current debts constitute the majority of the Company's liabilities, with 2008 figures indicating that due debts represented only 38.20% of the capital structure, and current debt comprised 98.23% of total liabilities This minimal loan ratio contributes to a negligible financial risk, as the Company enjoys low financial costs and can easily meet its debt obligations This stability is particularly advantageous given the interest rate fluctuations experienced in 2008.

In general, capital structure has a significantly improved compared with

In 2007, the Company demonstrated low financial leverage, indicating a lack of active business expansion efforts This suggests that the Company has not effectively utilized its financial resources to maximize profits.

From data collected through annual reports produced of the Company, the business performance of Company can be assessed as follows:

Figure 2.3: Recent status of the Company’s performance (USD)

(Source: NEXANS Vietnam Power Cable Company, Performance report years

Through chart (see Figure 2.3) shows that turnover and profit of theCompany each year (2005, 2006, 2007) was growing In 2008 and nine months of

2009 when sales tended to decrease the rate of interest on the revenue increased, the company has gradually sold products with higher profit:

- Total turnover increased approximately 31 to 55% compared with previous year.

- Profit correspondingly increase about 0.5 to 2 times compared with previous year

In 2008, amidst the global economic recession, Vietnam's economy faced significant challenges, prompting EVN to shift its investment strategy Instead of widespread investments, EVN focused on the new construction, upgrading, and renovation of key essential projects to navigate the economic downturn effectively.

In 2008, despite facing challenges, the Company significantly enhanced its export sales, which accounted for 55% of total turnover in the first year This strategic focus on exporting led to a turnover growth of approximately 9% compared to 2007, resulting in substantial profits.

In 2009, both the global and Vietnamese economies began to recover, leading to a gradual increase in the Company's turnover By the end of the first nine months of 2009, the Company's turnover and profit had risen by approximately 14% compared to the same period in 2008.

ANALYSIS OF STRATEGY, DEVELOPMENT TARGET OF THE PARTNERS

NEXANS KOREA is a subsidiary of the NEXANS France Group, a leading global manufacturer of power and telephone cables Following its separation from ALCATEL, NEXANS France Group has strategically focused on power cable products, expanding its market presence worldwide Currently, the group operates 130 representative offices and factories, including wholly-owned and joint venture companies, across 41 countries, generating an annual turnover exceeding 5 billion USD This extensive network of manufacturing facilities and sales operations positions NEXANS as a dominant player in the global power cable market.

Figure 2.4: Worldwide map of factories and offices of Nexans Group

(Source: http://www.nexans.vn/eservice/Vietnam-vi/navigatepub_159921_-

3371/B_n_Nexans.html) The group operates or supply in markets of electric wires/ cables for energy, telecommunication, rail network, automobile & ship building, construction sectors

NEXANS, a leading player in the global cable industry, specializes in a wide range of wires, cables, and cabling systems designed to enhance industrial productivity, boost business performance, improve security, elevate quality of life, and ensure long-term network reliability With a strong industrial presence in 39 countries and a workforce of 22,400 employees, NEXANS achieved a turnover of €6.8 billion in 2008.

 According to sector: Energy 62%, Telecommunication 14%, Civil electrical wire 24%.

 According to region: Europe 64%, Asia 7%, North America 19%, Other regions 10%

Nexans has been implementing policies to strengthen the leading role in cable market Group will have to capture all the development opportunities in all sectors and geographic areas.

NEXANS has successfully restructured its organization by dividing operations based on regions and territories, which has enhanced efficiency and increased activity This strategic approach allows NEXANS to better understand market development trends and effectively meet customer demands.

The creation of the Strategic Institute, comprising various functional departments within the group, has enhanced marketing capabilities and improved internal information exchange, facilitating the development of a focused and effective strategy for growth.

NEXANS has built three strategic key points of the group’s strategy which needs to seriously implement:

1 Making NEXANS more attractive to customers (improving reputation, brand): By strengthening sales activities, increase training to improve qualifications, sense of selling team

2 Build a appropriate management mechanism: to find out, reduce the main points causing loss; remove it from the apparatus of group

To meet this objective, the group must focus on reducing both operating and fixed costs Additionally, investing in research is essential to develop innovative solutions and services that enhance customer value, helping the group stand out from its competitors.

3 Develop driving forces of growth: By focusing all efforts and investments on the target market segments and countries with rapid and potential growth A map of 19 market segments was created with a focus on investment priorities of the Group in the dynamic development area To do this the Group will focus on geographic areas such as ASEAN, China,Middle East, Central Europe, Brazil, Russia; high voltage cable production sector, network equipment, LAN cable, protection cable etc.

2.3.1.3 Some main solutions in period 2009 - 2010

The personnel program incorporates 12 essential actions aimed at enhancing the skills of the regional management team, specifically the country managers These key actions will involve targeted training and retraining as needed to align with the Group's strategic objectives.

The group must expedite the implementation of both regional and product market segments to secure business interests, potentially bypassing certain intermediate steps to reach their objectives efficiently.

 Research and development program must be deployed continuously according to compatible direction with marketing strategy and priority strategies.

The "Sale +" program has been introduced to enhance the selling strategies of our team by focusing on the development of their actual selling abilities within the industry This initiative aims to transform the understanding of customer demands, blending sales techniques with consultative approaches for improved outcomes.

 Nexans will continue to modernize equipment and apparatus management strongly in order to reduce fixed costs

 Build up a saving program focus on reduction approximately 15 million EURO in the purchase of equipment.

The Group's development strategy leverages over 100 years of expertise in the cable manufacturing and business sector By investing in advanced technology, machinery, and financial resources, the Group aims to dominate emerging power cable markets in developing regions worldwide.

Developing countries in Asia, such as Vietnam, are expected to experience a significant increase in demand for power cables over the next two decades However, these nations often face challenges related to limited capital, technology, and technical expertise To effectively address these issues, forming joint ventures with local companies can be a strategic approach, enabling foreign investors to benefit from state incentives aimed at attracting investment, favorable tax policies, and access to affordable labor.

Electricity of Vietnam was established on June 22, 2006, by the Prime Minister through Decision No 148/2006/QD-TTg, and its operational regulations were outlined in Decision No 163/2007/QD-TTg on October 22, 2007 The current organizational structure of the group is detailed below.

- Board of Management, counseling and assisting for the Board of Management are Supervisory and General departments.

- Board of Director , counseling and assisting for the General Director Board are office and 15 professional and technical departments.

* Members, subsidiaries and affiliated companies

Up to June 30, 2009 the Electricity of Vietnam has 71 members and subdivisions, 22 affiliated companies, including:

- 08 member company which are independent accounting which have not changed according to Enterprise Law,

- 09 State one-member liability limited company hold 100% charter capital by EVN,

- 22 joint stock company with capital dominated by Group,

Vietnam's electricity sector is characterized by a dominant state ownership and a diverse range of enterprises, showcasing advanced technology and modern management practices It operates across multiple sectors, including electricity generation, public telecommunications, and mechanical power The integration of production and business with scientific research, technology development, and training is essential for fostering rapid and substantial growth, enabling the sector to compete effectively in the global economy.

The goal of EVN is to strive to provide sufficient power demand for the economic-social development and life of the people in the country; ensure business efficiency.

The Group has 14 medium and large capacity power plants with a total installed capacity of more than 10,000 MW In 2008 there were some main achievement as follows:

- Power production and purchase is estimated at 74.07 billion kWh.

- Commercial electricity reached 65.9 billion kWh.

- Turnover reached 57,000 billion VND, total profit is estimated at 412,220 million VND

The investment in rural electricity development by EVN has successfully extended the national grid to 100% of districts, 97.21% of communes, and 94.03% of rural households, surpassing the government's 2010 targets by 4.03%.

2.3.2.2 Introduction of Hanoi Power Company

Hanoi Power Company, a state-owned enterprise and a member of Electricity of Vietnam, plays a crucial role in supplying electricity essential for the political, economic, social, and cultural development of Hanoi This organization is vital for ensuring the security, defense, and quality of life for the residents of the capital city.

ANALYSIS OF ENVIRONMENTAL FACTORS INFLUENCING THE COMPANY’S OPERATION

2.4.1.1 Elements of national economy growth and electric power industry growth

With the level of annual economic growth of about 7-8% from now up to

In 2020, the electricity industry must advance to address the growing energy demands of the economy, necessitating an annual investment of approximately 15% in grid renovation The Company will evaluate and allocate the necessary resources to support this initiative, focusing on developing appropriate product categories aligned with the power grid development plans of EVN for the periods of 2010-2015 and 2015-2020.

Economic growth drives increased social investment, particularly in industrial projects and large infrastructure developments This surge in investment significantly boosts the demand for bulk products such as wire and cable.

2.4.1.2 Elements of interest rate, exchange rates, inflation

Interest rates play a crucial role in a company's ability to borrow capital for production and investment activities Low interest rates facilitate borrowing and investment in equipment and other significant expenses, enhancing the value of revenues from these investments However, if loan demand rises, interest rates may increase, leading to higher costs of capital and reduced consumer spending As interest rates climb, banks may prioritize larger loans to minimize transaction costs, making it more challenging for smaller companies to access credit Consequently, these companies face the dual pressure of rising input costs and lower sales, limiting their ability to adjust prices compared to larger enterprises with greater market power.

The exchange rate plays a crucial role in determining the relative value of currencies between countries, significantly influencing the competitiveness of businesses in the global market In Vietnam, exports are predominantly transacted in USD, placing the burden of exchange rate risks solely on local enterprises Additionally, substantial foreign capital inflows, including direct and indirect investments, remittances, and commercial credit, contribute to an excessive money supply in Vietnam, which in turn drives up demand for imports.

Inflation undermines economic stability, leading to slower growth, higher interest rates, and fluctuating exchange rates As inflation rises, companies face increased risks in investment planning and struggle to accurately forecast income from long-term projects Holding off on investments due to inflation concerns can hinder a company's performance Additionally, government measures to control inflation and consumer price growth may initially seem beneficial but complicate capital mobilization for investments, ultimately constraining production while raw material and labor costs continue to escalate.

2.4.1.3 Elements of population, culture, religion, policy and law …

Vietnam's socio-economic conditions remain underdeveloped, leading to a low standard of living Despite a potential market of approximately 90 million people, there is a lack of focus on customer quality standards This presents significant challenges for companies that prioritize quality over pricing, as they navigate a market where consumer interest in quality is limited.

In the near future, as economic integration progresses and international customers bring high-quality standards to Vietnam, the company will be well-positioned to identify market opportunities and meet its sales targets This aligns with the company's long-term strategic plans.

To ensure sustainable growth, the Company must focus on enhancing brand recognition and maintaining a strong market reputation Additionally, it is essential to educate customers about quality, which will help foster a loyal customer base and attract potential clients.

The strategy of the Company is significantly influenced by ethical and social factors, particularly in the context of ongoing issues such as corruption and monopolistic practices within the power sector These challenges have resulted in frequent harassment by employees of power companies, who prioritize low-cost, low-quality procurement over quality and reliability Until these detrimental behaviors are addressed, the Company will struggle to enhance its quality and maintain a competitive advantage in the market.

2.4.1.4 Elements of sscience & technology progress

In the power cable manufacturing industry, advancements in science and technology have not significantly altered production methods since its inception However, to enhance efficiency and reduce costs, companies must continuously integrate the latest technological innovations into their management practices This adaptation is essential for maintaining competitiveness in a rapidly evolving technological landscape.

Nexans Group is committed to developing innovative technological products while actively monitoring advancements in high-tech solutions Given the dynamic nature of the Vietnamese market, which is poised for technological growth, the company must focus on the research and production of lightweight superconducting wire that offers excellent electrical conductivity and heat resistance This strategic approach aims to meet the evolving demands of the Vietnamese market in the near future.

Application of Porter's Five Forces model presented theriotically in Chapter I to analyze and assess the industry environment factors affecting the Company, as follows:

2.4.2.1 Buyer’s power in negotiation a) Overview of power cable world market

The electric cable manufacturing industry has evolved over centuries, becoming highly advanced with comprehensive machinery that enhances production efficiency As a crucial component in infrastructure development, electric cables play a vital role in supporting the socio-economic framework of nations However, the global demand for electrical cables has reached a saturation point, particularly in developed countries.

In developed countries, particularly in Europe, the demand for power cables has nearly reached saturation As a result, manufacturers are now focusing on researching innovative products, exploring substitutes, and developing cables specifically for telecommunications and information technology.

Underdeveloped countries in the world such as countries in Africa, South America, Asia etc are currently potential markets that the strategic direction of international power cable manufacturers are targeting

In Southeast Asia and Asia there are also two different regions of the power cable market:

In developed nations like Japan, South Korea, and Taiwan, the electric cable industry has reached a level comparable to that of European countries, supported by robust infrastructure that aligns with the socio-economic conditions of these nations Consequently, the demand for electric cables in this region remains relatively low.

Developing countries like Thailand, Malaysia, Singapore, and China boast well-established power cable production industries and robust power cable markets This growth is largely driven by the continuous advancement of the electricity sector, which consistently leads infrastructure development.

ANALYSIS OF THE COMPANY’S INSIDE

As a joint venture with EVN, the largest customer in the market, the Company has enjoyed priority access to specific market segments While this presents a significant advantage, it has also led to a lack of effective marketing strategies and activities To address this issue, the Company must focus on gaining valuable experience and developing its capabilities In the immediate future, it is essential to establish the necessary conditions to build a strong brand, secure a stable market presence, and implement a suitable marketing strategy.

The company benefits significantly from its joint venture with EVN and a prominent foreign manufacturer, enabling it to effectively gather essential market information This strategic advantage allows the company to access precise data regarding market demand and future product trends, which is crucial for formulating an appropriate development strategy.

 Market share: The company is currently holding a significant market share in providing products for overhead electric cables to build 500kV, 220kV and 110kV transmission lines of EVN.

As the investment in transmission line projects nears completion, the company is likely to experience a natural decline in market share To secure long-term growth, it is essential for the company to explore opportunities in market segments beyond the electricity sector.

To enhance market presence, the Company should diversify its product offerings beyond overhead aluminum and aluminum alloy products by incorporating copper cables and high and low voltage underground cables This strategic investment will leverage existing customer relationships and enable the Company to capture a larger share of the market segment.

 In contrast, the concentration in selling products for only some main customers (almost fixed) as also does not create good conditions for developing marketing activities of the Company

Currently, the Company lacks a defined pricing strategy due to the influence of its two joint venture partners, limiting its ability to actively manage prices, particularly during challenging times when discounts cannot be offered to secure contracts This situation poses significant challenges to the Company's growth plans To effectively maintain and expand its market share, the Company must develop a suitable pricing strategy that prevents competitors from gaining an advantage in the market.

Figure 2.9: Company’s revenues over years 2005 - 2008 based on types of sales

(Source: NEXANS Vietnam Power Cable Company, Performance report years

The chart (refer to Figure 2.9) illustrates that the Company's sales largely stem from direct-negotiation and direct-procurement contracts awarded by EVN, primarily driven by urgent needs for construction and grid renovation projects in Vietnam While this approach provides certain advantages for the Company, it also contributes to a stagnation in its sales and marketing efforts.

The chart indicates that the Company has secured only about 12% of competitive bidding courses in 2008, winning just 5 out of 30 bids, primarily due to pricing issues Additionally, sales contribute only 12% to the total revenue, highlighting ineffective cost price management The Company typically bases its bidding prices on production costs, which are often 3 to 15% higher than those of competitors, resulting in a low contract win rate.

The Company employs a total of 123 staff members, including 42 highly skilled engineers and professionals with master's and Ph.D degrees, representing 34% of the workforce With over 20 years of production experience, the majority of employees are well-trained, providing a significant competitive advantage for the Company.

The Company benefits from the regular rotation and assignment of management officials from its Partners, enhancing its personnel capabilities However, frequent changes in key staff may lead to instability and negatively impact customer relationships To ensure continuous and effective development, the Company should propose reasonable timelines for personnel changes to its Partners.

The staff at Vietnam Partner possess strong skills, qualifications, and ethics, having received extensive training through challenging tasks at Yen Vien Mechanical Company While their discipline has improved through their experience in the joint venture, employee retention has declined, resulting in a decrease in self-awareness and initiative among workers, which ultimately affects labor productivity.

The company's labor relationships stand out in the industry, with a strong attachment between personnel and management that surpasses competitors However, the long-standing routine at Yen Vien Mechanical Factory has led to a decline in compliance, as employees often execute orders without question, a challenge typical in joint-venture enterprises Despite having a small workforce of fewer than 100 people, the company can effectively address these issues through strategic management policies and active engagement with trade unions.

The Company has implemented an effective staff policy by selecting skilled mid-level managers from Yen Vien Mechanical Company, who possess strong foreign language abilities and superior professional and management competencies compared to industry peers To further motivate these employees, the Company has established a competitive wage and benefits regime, fostering a productive work environment that encourages all staff to excel in their roles and aspire to advance within the organization.

Achieving an optimal balance in workforce management is crucial for maximizing production efficiency By maintaining a reasonable number of employees—avoiding both overstaffing and understaffing—the company effectively utilizes its personnel's full production capacity This strategic approach allows for an efficient operational framework, ensuring that resources are allocated wisely and costs remain manageable, even during periods of reduced demand.

The company's production capacity is currently constrained by a limited number of machines, many of which are outdated and require replacement or upgrades to enhance efficiency.

The joint venture with Nexans Group provides significant advantages, including advanced technology and extensive production experience, which allows for cost-effective technology investment As a result, the Company's technology investment remains relatively low compared to the broader industry and its competitors.

SWOT MATRIX

Through analyzing the opportunities, threats, strengths, weaknesses as mentioned above, the SWOT matrix table is built as shown in Table 2.7 below:

1 Good growth of EVN’s aluminum, aluminum alloy power cable demand

2 General demand growth of other kind of electric cables also fairly good

3 Customers’ requirement on product quality is improving

4 Nexans Group’s support in regional and world markets

5 Easy access to new, modern manufacturing technology

1 Big competitors are investing on products which currently are key ones of the Company

2 Stronger and more serious competition in cable market

3 Potential risk from depending too much on EVN’s cable consumption

4 Cable market recently represents unequal and not transparent competition due to incomplete regulations/sanctions

5 Pressure and instability incurred from material suppliers

1 Stable and sound financial resources thanks to support from both partners.

EVN - the biggest and most important customer in market.

3 Have some strong product lines with good reputation, firm position in the market.

4 Good ability to quickly grasp new and advanced technologies.

5 Good management methods and skills; compact and stable organizational structure and personnel.

SO strategies: take advantage of opportunities to maximize the strengths, including:

SO1 - Investment for expanding production scale with new & advanced technologies, both for traditional products and new products.

SO2 - Make the most of EVN customer and other traditional customers.

SO3 - Investment strongly to develop export markets.

ST strategies: exploiting strengths to minimize threats/ risks:

ST1 - Strengthening marketing, broadcasting with emphasis on major customers about good brand and reputation of the traditional product lines of Company.

To maximize investment in developing new products and markets, it's essential to leverage the strengths of both parent companies Additionally, exploring backward vertical integration can empower the organization to take control of raw material inputs, enhancing overall efficiency and innovation.

1 Trade mark, brand name are still not well known in the market

2 Product categories are still limited; pricing is less competitive.

3 Small production scale; lack of comprehensive machinery.

4 Does not have stable and firm material supply sources

5 Management apparatus still imperfect; less assertive in market opportunities.

WO Strategies: Take advantage of opportunities to overcome weaknesses:

WO1 - Development of new product categories, targeted to various customers and market segments.

WO2 - Increase advertising, marketing emphasis on brand name coupled with guaranteed quality and good service.

WT strategies: defensive plan to prevent the risks targeting on Company’s weaknesses which could jeopardize the Company:

To maintain production levels, it is essential to adapt to competitive pressures, which may necessitate reducing output in the face of intense competition Implementing a low-cost strategy can enhance competitiveness, allowing for flexibility in quality and service standards to meet market demands effectively.

Through analysis and construction of SWOT matrix as presented in table 2.6, it can be drawn following combinations:

 SO strategies: Take advantage of opportunities to maximize the strengths, including:

 SO1 - Investment for expanding production scale with new & advanced technologies, both for traditional products and new products.

 SO2 - Make the most of EVN customer and other traditional customers.

 SO3 - Investment strongly to develop export markets.

 ST strategies: Exploiting strengths to minimize threats/ risks:

 ST1 - Strengthening marketing, broadcasting with emphasis on major customers about good brand and reputation of the traditional product lines of Company.

 ST2 - Make the most of both parent companies in investment for developing new products, new markets

 ST3 - Consider the ability to develop backward vertical integration to take initiative on raw material inputs.

 WO strategies: Take advantage of opportunities to overcome weaknesses:

 WO1 - Development of new product categories, targeted to variuos customers and market segments.

 WO2 - Increase advertising, marketing emphasis on brand name coupled with guaranteed quality and good service.

 WT strategies: Defensive plan to prevent the risks targeting on

Company’s weaknesses which could jeopardize the Company:

 WT1 - Retain the scale of production, can be cut if competition is too fierce, hard product sales.

 WT2 - Applying low cost strategy to improve competitiveness, do not set high requirements on quality and service.

This chapter conducts a thorough analysis of external environmental factors, industry dynamics, and internal company conditions to identify strengths, weaknesses, threats, and opportunities The insights gained are then utilized to construct a SWOT matrix, which will guide the development of potential business strategies for the company.

BUILDING AND MANAGING COMPANY’S BUSINESS STRATEGY

DETERMINATION OF STRATEGIC VISION, MISSION AND GOAL OF

While an organization's strategic vision often looks towards the distant future, encompassing timelines of 10, 20, or even 30 years, it is crucial to define a clear strategic vision and mission within a shorter business strategy, such as the 2010-2015 period This vision serves as a guiding direction, ensuring the company's viability and development during that timeframe.

The Company needs to build strategic vision for the two market parts: the domestic market and international markets (export).

The Company strategic vision is stated as follow:

 To become the leading partner in the field of electric cable supply for each new project growing up in Vietnam.

 To maintain, strengthen the leading position in the market regarding traditional product lines.

 To balance between domestic market and international markets in order to maintain mutual motivations for development while sharing potential risks.

The Company's strategic mission focuses on maximizing shareholder value by effectively addressing customer needs, emphasizing that customer satisfaction is the core purpose of its existence.

In period 2010 – 2015, goals of the Company include:

1 Named in top five largest companies manufacturing electric wires and cables in Vietnam.

2 Revenue in 2015 is doubled than that of 2010, corresponding to the average revenue growth of about 15% per year.

3 Net profit in 2015 increased 3 times compared with 2010.

4 At the end of the period, the product quality of the Company shall reach same level with the quality of the products manufactured by other members of the Nexans Group in the world; no more complaint from customers about product quality issue.

5 Maintain balance between revenues from domestic sales and exports.

6 Continue to consolidate the position as one of the leading partners who supply EVN with product lines of power aluminum cable, aluminum alloy cable for the transmission and distribution lines project of EVN. However, market and product development should be adequately respected in order to gradually reduce dependence on contracts with EVN.

7 Achieve firm and strategic relations with at least 2-3 suppliers of raw materials; ensuring active, stable supply of raw materials under long- term contracts.

8 Develop and get prepared for at least 2-3 product line as copper wireless, cable.

In 2010, the Company established its objectives in alignment with the recovering economic landscape of Vietnam and the global market, aiming for an 18% increase in revenue compared to 2009 This target sought to match the turnover levels of 2007, which marked the peak sales year for the Company prior to the recession.

Figure 3.1: Company’s targeted revenue for year 2010

Besides, a number of specific objectives set for 2010 as follows:

- Access to the Southeast Asian markets with existing products of the Company.

- Access the Brazilian market with new product line of heat aluminum alloy electric cable, and Australian market with product line of aluminum alloy electrical cable.

- Reduce the number of complaints about product quality down to half compared with 2009.

SELECTION OF BUSINESS STRATEGY

As addressed and analyses in Section 1.2 hereinabove, Company can look at one out of three overall business strategies, as below:

The Table 3.1 below highlights main characteristics of those three overall business strategies to create competitive advantage:

Table 3.1: Main features of overall business strategy

High (mainly by the uniqueness of products)

Low to high (price or original)

Low (one or several segments) Ability in creating differentiation

Research & development, sales and marketing

Any ability to create differentiation

To choose the suitable overall business strategy for the company, it is necessary to consider the following two factors:

1 Specific features of electric cable industry:

The power wire and cable industry features low market entry barriers due to the diverse demand for various types of cables, including large and medium-sized bare power cables for transmission and distribution, shielded electrical cables for industrial applications, and small power wires for general civil use Additionally, the investment costs for machinery and equipment in power wire and cable manufacturing, especially for universal civil applications, are relatively low.

- Low market segment: mainly focused on three main product categories:

The company specializes in manufacturing power cables for power transmission and distribution systems, primarily serving EVN and its subsidiaries Additionally, it produces electric wires and cables tailored for industrial applications, as well as power wires designed for general civil use.

Power wires and cables are inherently non-consumable goods, which means that emphasizing unique products, original features, or specialized uses holds little significance in their marketing.

2 Characteristics of the Company: The Company is a joint venture invested by two partners (one foreign, one domestic), and has been in operation for about 10 years, so Company has some following features:

The production costs remain elevated compared to larger competitors, primarily due to high operations and maintenance (O&M) expenses, a common trait of joint ventures While the company aims to reduce these costs over the long term, any reductions must be implemented gradually rather than rapidly.

- Product family is still quite narrow (product line is just only aluminum & aluminum alloy power cable for power sector and industrial).

The focusing strategy emerges as the optimal choice for the Company, emphasizing the importance of tailoring its business approach to the unique characteristics of the industry.

The electric and cable manufacturing industry is characterized by saturation, featuring a stable competitive landscape dominated by a few large companies alongside numerous smaller players Consequently, competitive strategies must take these dynamics into account to effectively navigate the market.

Analyzing the business strategies of influential companies like LS-Vina, Tran Phu, and Cadisun in the North, along with Cadivi, Tan Cuong Thanh, and Thinh Phat in the South, provides valuable insights into effective market influence and competitive positioning Understanding these strategies can help businesses identify best practices and innovative approaches to enhance their own operations and market presence.

The company is committed to enhancing its position in the aluminum and aluminum alloy cable market for the power and industrial sectors, while also prioritizing market research and technological advancements To stay competitive, it is essential to develop new, specialized product lines rather than focusing on universal civil products that are already dominated by larger competitors.

To enhance market access, it is crucial to expand the reach of existing products through strategic advertising and marketing efforts By focusing on influencing customer brand choices and building a strong reputation for the company's brand and products, businesses can effectively increase their market presence and drive sales growth.

- Developing markets: mainly focused on export markets on the basis of fully utilized the support of the mother company - Nexans Group.

- Strengthening and controlling relationships with key suppliers (raw materials for manufacturing electric cables).

3.2.3 Analysis, comparison and selection of business strategy using QSPM tool

- Overall business strategy which has been identified

- Analysis of industry features and competitors

The company can explore a strategic alternative focused on leveraging its strengths and opportunities (SO) alongside its strengths and threats (ST), emphasizing a proactive "attack" approach to capitalize on market advantages and mitigate potential risks.

 Investment in expanding large-scale production with advanced technology for both traditional and new products

 Make the most of the needs of EVN and other traditional customers

 Large investment to develop export markets

Investment in backward vertical integration serves as an alternative strategy that combines strengths and opportunities (SO), strengths and threats (ST), and weaknesses and opportunities (WO) This approach emphasizes a proactive stance of "attack while maintaining defense," ensuring a balanced strategy that leverages existing capabilities while safeguarding against potential challenges.

The strategy emphasizes maintaining a strong focus on established product lines that hold prestige and a solid market position, while also introducing new product lines aimed at traditional major customers Additionally, there is a concerted effort to gradually reduce reliance on contracts with EVN.

 Make the most of business opportunities with the support of both parent companies (EVN and Nexans Group)

 Consolidate and exploiting the export market that the company's products have place; gradually penetrate new markets.

 Improving competitiveness through gradual reduction in cost of production, but still emphasizes the quality of priority. iii Strategy alternative No 3 (Alt No.3): combination strategies for ST,

WO and WT, with the key sense of "defensive, risk reduction”, with the following contents:

 Maintaining the scale of production, no investment in upgrading, expanding, not developing new products Strengthen the existing market, not invest in developing more

 Make the most of business opportunities with the support of the two parent companies (EVN and Nexans Group)

 Application of low-cost strategies to improve competitiveness, do not set high requirements on quality and service.

Using QSPM tool (Quantitative Strategic Planning Matrix) to compare and evaluate the strategic business plan alternatives as mentioned above, as presented in the Table 3.2 below:

Alt No 1 Alt No 2 Alt No 3

Attractive score Weighted attractive score Attractive score Weighted attractive score Attractive score Weighted attractive score

1 Stable and sound financial resources thanks to support from both partners

EVN - the biggest and most important customer in market

3 Have some strong product lines with good reputation, firm position in the market

4 Good ability to quickly grasp new and advanced technologies

5 Good management methods and skills; compact and stable organizational structure and personnel

1 Trade mark, brand name are still not well known in the market 0.08 2 0.16 2 0.16 3 0.24

2 Product categories are still limited; pricing is less competitive

3 Small production scale; lack of comprehensive machinery 0.04 2 0.08 2 0.08 3 0.12

Attractive score Weighted attractive score Attractive score Weighted attractive score Attractive score Weighted attractive score and firm material supply sources

5 Management apparatus still imperfect; less assertive in market opportunities

1 Good growth of EVN’s aluminum, aluminum alloy power cable demand

2 General demand growth of other kind of electric cables also fairly good

3 Customers’ requirement on product quality is improving

4 Nexans Group’s support in regional and world markets

5 Easy access to new, modern manufacturing technology 0.02 4 0.08 3 0.06 2 0.04

1 Big competitors are investing on products which currently are key ones of the Company

2 Stronger and more serious competition in cable market 0.05 2 0.1 2 0.1 2 0.1

3 Potential risk from depending too much on

4 Cable market recently represents unequal and not transparent competition due to incomplete regulations/sanctions

5 Pressure and instability incurred from material suppliers

The evaluation of items is based on a total weight of 1, where attractiveness is assessed according to their conformity with current alternatives The rating scale ranges from "Very Attractive" at 5 points to "Very Unattractive" at 1 point, allowing for a clear differentiation of appeal among the evaluated items.

According to the evaluation and scoring results, Alternative No 2 received the highest score, making it the most appealing business strategy for the company As a result, this option has been chosen for implementation.

NECESSITY AND IMPORTANCE OF DETERMINING AND SELECTING

AN APPROPRIATE BUSINESS STRATEGY FOR A BUSINESS

The study highlights the critical importance of selecting and developing an appropriate business strategy, particularly for small and medium-sized enterprises (SMEs) like NVPC By systematizing the theory of strategy, both in general and specific to business, the research emphasizes the necessity for enterprises to adapt their strategies to thrive in today's competitive landscape.

A well-crafted business strategy is crucial for establishing differentiation and gaining a competitive edge in the market It defines the company's goals and direction, serving as a foundational guide for all manufacturing activities By effectively identifying and leveraging business opportunities, a solid strategy also enables companies to proactively address market threats.

A successful business strategy not only enhances resource efficiency and strengthens competitive positioning but also ensures sustainable development for enterprises It serves as a crucial foundation for formulating policies and making decisions that align with market fluctuations.

PLANNING AND MANAGING IMPLEMENTATION OF BUSINESS STRATEGY

A successful business strategy hinges on the ability to identify and create differentiation, allowing enterprises to gain a competitive advantage over their rivals in the market.

Corporate leaders must adopt a comprehensive and macroscopic perspective when assessing the external environment, including political, economic, social, and industrial factors This broad view is essential for developing and implementing effective business strategies Additionally, they should employ a microcosmic approach to objectively analyze and evaluate specific issues related to their enterprises.

A strategic business plan is essential for achieving success, as it establishes clear objectives and addresses fundamental questions such as "Who are we?", "Why do we exist?", "Where are we?", and "Where are we headed?" This approach is reminiscent of Sun Tzu's philosophy, which emphasizes the importance of understanding one's position and direction in order to navigate challenges effectively.

"Know yourself, know, hundred battle hundred wins”.

Effective strategy implementation is as crucial as strategy planning itself Companies must clearly define their objectives and identify the necessary resources for each phase of implementation Additionally, it is essential to outline deployment steps and establish mechanisms for controlling, monitoring, and evaluating the effectiveness of the implementation process.

In today's rapidly evolving landscape, businesses in both production and services must recognize the significant impact of advancements in science and technology, as well as global trends To thrive, companies need to consistently update and adapt their strategic approaches to production activities in alignment with these new realities and theories This adaptability is a crucial factor in achieving business success.

LIMITS OF THE STUDY AND PROPOSED ACTION(S) TO BE TAKEN .120 REFERENCES

Despite our extensive efforts in material research and the application of learned theories to NVPC's business strategy, limitations in knowledge and access to information have resulted in certain shortcomings in this study While there may be imperfections in the content and potential subjectivity in our analysis, the group members take pride in our dedicated efforts throughout the implementation process.

The group aims to enhance research and development on relevant topics, focusing on both theoretical and practical aspects while closely aligning with NVPC practices They aspire for this project and their studies to serve as a valuable reference for NVPC, ultimately contributing to its success and sustainable development in the years ahead.

With an open mind and attitude, the group is always eager to receive the reviews and comments from Judges to make this study more perfectly.

1 Pro./Ph.D Le The Gioi, Dr Nguyen Thanh Liem, MBA Nguyen Huu Hai

(2009), Strategic Management, Statistics Publishing House.

2 Griggs University, Global Advanced Master of Business Administration, Student’s materials, Lecture Presentation of Strategy Administration subject.

3 Huynh Minh Em (translated) (2008), MBA within reach – Marketing subject, HCM city’s Geneal Publishing House.

4 Ph.D/DBA Nguyen Huu Than (2008), Human resource administration, Labor & Scocial Publishing House.

5 NEXANS Vietnam Power Cable Company, Performance report years 2005,

6 NEXANS Vietnam Power Cable Company, Annual reports years 2006,

7 NEXANS Vietnam Power Cable Company, Orientation of business development period 2009 - 2012.

8 Electricity of Vietnam, Development strategy period 2007 - 2015.

1 M E Porter (1980), Competitive Strategy, New York: Free Press

2 H Barkema, J A C Baum, & E A Mannix (2002), “Management challenges in a new time”, Academy of Management Journal.

3 C M Fiol (2003) “Organizing for knowledge-based competitiveness: About pipelines and rivers”, Managing Knowledge for Sustained Competitive

Advantage, San Francisco: Jossey-Bass.

4 G A Bigley & K H Roberts (2001), “The incident command system: High reliability organizing for complex and volatile task environments”, Academy of Management Journal.

Tiêu đề	Building Business-Level Strategy Nexans Viet Nam Power Cable Company
Trường học	Griggs University
Chuyên ngành	Global Advanced Master of Business Administration
Thể loại	capstone project report
Năm xuất bản	2010
Thành phố	Hanoi

Định dạng
Số trang	123
Dung lượng	1,58 MB